Chapter 7 Environmental Risk Analysis 2007 Thomson LearningSouthWestern

Chapter 7 Environmental Risk Analysis © 2007 Thomson Learning/South-Western Thomas and Callan, Environmental Economics

Overview of Risk n Risk is the chance of something bad happening n Dealing with risk involves two tasks: n n Identifying the degree of risk Responding to it n Policy is a formal response to social risk n Policymakers must use a systematic risk assessment before devising a policy response 2

Overview of Risk (continued) n Classifying risk n n Voluntary risk: deliberately assumed at an individual level Involuntary risk: not the result of willful decision p n Government tries to control society’s exposure to some involuntary risks, e. g. , chemical exposure Environmental risk is the involuntary risk of exposure to an environmental hazard n Hazard: source of environmental damage n Exposure: pathways between the hazard and the affected population or natural resource 3

Methods in Risk Analysis n Risk Assessment refers to identifying risk n n Qualitative and quantitative evaluation of risk of an environmental hazard to health or the environment In the US, there is a National Center for Environmental Assessment n Risk Management: responding to risk n Evaluating and selecting from among regulatory and nonregulatory risk responses 4

Risk Assessment

A Model of Risk Assessment (NAS 1983) Scientific Research and Data Collection Hazard Identification Dose-Response Analysis 4 Steps of RA or Fields of Analysis Exposure Analysis Risk Characterization RISK MANAGEMENT 6

Hazard Identification n Use of scientific data to determine if a "causal" relationship exists between the pollutant and adverse effects on health or the ecology n 3 scientific methods to identify health hazards n Case cluster p n Animal bioassay p n A study based on the observation of an abnormal pattern of health effects in some population group A study based on comparative findings of lab experiments on living organisms before and after exposure to some hazard Epidemiology p A study of causes and distribution of disease in human populations based on characteristics like age, gender, occupation, etc. 7

Dose-Response Analysis n Uses data from the hazard identification to devise a profile of the pollutant’s effects n The dose-response relationship gives the quantitative relationship between doses of the contaminant and corresponding reactions n Key element is determining a threshold n A threshold is the level of exposure up to which no response exists 8

response 0 response Hypothetical Dose-Response Functions dose 0 Dt dose 0 DO dos e INTERPRET EACH OF THESE 9

Exposure Analysis n Applies a generalized dose-response relationship to specific conditions for some population n Characterizes the sources of an environmental hazard, concentration levels at that point, pathways, and any sensitivities 10

Risk Characterization n A description of risk based upon an assessment of a hazard and exposure to that hazard n Two elements: p Quantitatively identifies the magnitude of the risk and a way to compare one risk to another p Qualitatively gives context to the numerical risk value 11

Quantitative Component of Risk Characterization n Can be measured using probabilities n some based on actuarial risks (using factual data) p number of victims relative to number exposed some are inferred from animal bioassays or epidemiology studies n Can be measured using a reference dose (Rf. D) n Rf. D is exposure to a hazard that can be tolerated over a lifetime without harm n p milligrams of pollutant per body weight per day 12

Qualitative Component of Risk Characterization n Comprises: p p p description of hazard assessment of exposure and any susceptible groups data used scientific and statistical methods used underlying assumptions n Identifies scientific uncertainties, data gaps, measurement errors 13

EPA’s IRIS n Integrated Risk Information System n n n Repository of consensus views on health risks of environmental contaminants Available to general public Each summary includes: p p p risk assessment table (quantitative measures) discussion of data used to form consensus reference listing of studies 14

Risk Management

Risk Management Responding to Risk n Risk management is the decision-making process of evaluating and choosing from alternative responses to environmental risk n Two major tasks: n n Determining what level of risk is “acceptable” to society Evaluating and selecting the “best” policy instrument to achieve that risk level 16

Determining “Acceptable” Risk n The extent of risk reduction determines the level of exposure and stringency of policy n Should exposure be set to 0? If not, what positive level is appropriate? n Officials might use de minimis risk as baseline n Might use comparative risk analysis to compare risk of environmental hazard to other risks faced by society n e. g. , risk of exposure to 4 p. Ci/l of radon compares to the risk of dying in a car crash 17

Selecting Policy Response n Evaluates alternative policies capable of achieving “acceptable” risk level n Selects “best” option n How? Uses risk management strategies 18

Risk Management Strategies n Used to evaluate options in a systematic way n Key considerations are n The level of risk established n The benefits to society from adopting the policy n The associated costs of implementing the policy n Prevalent risk management strategies are n Comparative risk analysis n Risk-benefit analysis n Benefit-cost analysis 19

Risk Management Strategies n Comparative risk analysis is an evaluation of relative risk n n n Known as risk-risk analysis when used to select from alternative policy instruments Risk-benefit analysis involves assessing the risks of a hazard along with the benefits to society of not regulating that hazard Benefit-cost analysis uses the economic criterion of allocative efficiency, comparing the MSB of a risk reduction policy to the associated MSC n Supported by presidential executive orders, starting with President Reagan 20